Outpatient Pulmonary Rehabilitation

No national Medicare policy currently exists. This causes inconsistencies from intermediary to intermediary regarding coverage and payment of outpatient pulmonary rehabilitation services. HCFA, fearing an increase in claims by hospitals and thus millions of dollars in payments, refuses to write a standardized coverage policy (a "cookbook"). They continue to give local intermediaries the decision-making authority regarding whether outpatient rehabilitation should be covered-by whom and how frequently. Increasingly, intermediaries are issuing their own formal written policies. We are aware that Ohio, Florida, Virginia, Arkansas, and Alabama all have issued new coverage policies which affect pulmonary rehabilitation.

AARC's Position:
We, along with other interested organizations, continue to advocate creating a national coverage policy that will utilize an industry-developed model of a pulmonary rehabilitation program. When we are made aware of any local intermediary policies, we review them and submit comments to the intermediary.

What You Can Do:
Notify the AARC's executive office of any new or impending coverage policies in this area. Seek out physician and beneficiary support for your program, and involve them immediately if your program is threatened with reduction of coverage.

AARC Receives Update on Pulmonary Rehab LMRPs, National Coverage Policy

February 14, 2000
The AARC has received the following correspondence regarding the anticipated release of a national coverage policy for pulmonary rehabilitation. We were surprised to learn from the following message that it appears there is now a focus on issuing Local Medical Review Policies (LMRPs) rather than a national policy. The e-mail messages between Cheryl West, MHA, AARC Director of Government Affairs, and Michael Turek, MD, Medical Director, Blue Cross Blue Shield of California, indicate that rather than the national policy, the Health Care Financing Administration will institute a template for fiscal intermediaries to adapt to local needs. We are concerned about this turn of events, and as more information becomes available, we will keep you informed.

From West to Dr. Turek
The American Association for Respiratory Care, which is the professional association for respiratory therapists is anxiously awaiting the issuance of the coverage policy for pulmonary rehabilitation. We've heard various rumors (i.e. the policy will be issued in April; it will be issued as 10 regional LMRPs, it will be a single national policy; it replicate the current CA policy, it will replicate the current FL. policy; it will be similar, but with important changes to the CA/Fl. policy, etc.). AARC would appreciate it if you could provide any updates as to timing and content so that we might put this information on our web page (aarc.org) to relieve the various rumors and concerns. I appreciate your help. Thank you.
Cheryl A. West, MHA
Director, Government Affairs

From Dr. Turek to West
The "Template" Pulmonary Rehab Services LMRP is finally ready for distribution to the Fiscal Intermediaries for their perusal. Whether or not each FI changes the Template to meet their local needs, or even uses it, is entirely up to them. Whether or not there will be a "national" policy remains to be seen, and I have not been contacted by anyone re this issue. Our policy here at Blue Cross of California will be a less restrictive modification of the template and therefore a revision of our current policy and will be placed on our web site bcc-medicare.com, and sent to our providers in the very near future.

HCFA Invites AARC to Help Design Rehab Classification System

March 3, 1999
Julien Roy, RRT, will be representing the AARC at a meeting of the Health Care Financing Administration (HCFA) to develop a classification system for patients in rehabilitation hospitals.

The meeting will be held on March 3 at HCFA offices in Baltimore. The AARC, along with other associations whose members are involved in rehabilitation, has been invited to participate in designing the Rehabilitation Resource Groups, Version 2000 (R2G2), which is the name of the system that will be used to classify rehabilitation patients.

This meeting will provide an overview of the methodology for developing R2G2. The primary focus will be on the study design, sample selection, recruitment of participant facilities and data collection procedures.

Roy served as chair of the AARC's Continuing Care/Rehabilitation Specialty Section for two years and is in the pulmonary rehabilitation department of Halifax Medical Center in Daytona Beach.

HCFA Approves Pulmonary Rehab for NETT

March 10, 1999
The Health Care Financing Administration (HCFA) recently released updated information on the National Emphysema Treatment Trial (NETT). Of special interest to respiratory therapists, particularly those involved with pulmonary rehabilitation and acute patient care, is that HCFA has approved across the board any pulmonary rehabilitation services for participants of the NETT.

HCFA has realized the necessity and benefit of pulmonary rehabilitation services in this program which is a definite step in the right direction. This move supports our efforts to demonstrate to HCFA the need for such services and could help pave the way for a national Medicare policy.

The Federal Register document explaining the new provisions for NETT participants is available here for your review.

AARC Responds to FI's Pulmonary Rehab Refusals in WY, AZ

February 23, 1999
Late last year, the AARC became aware of fiscal intermediaries in Wyoming and Arizona refusing coverage of Medicare outpatient pulmonary rehabilitation services. We responded swiftly and strongly to this situation and recently received a response from Health Care Financing Administration (HCFA) authorities.

While there is still not a national Medicare policy in place to deal with outpatient pulmonary rehabilitation, according to HCFA Coverage and Analysis Group Director Grant Bagley, MD, the possibility for establishing such a policy is definitely there. Until that happens, the AARC is ready to respond on behalf of RTs across the country who might encounter situations similar to those discussed here. Please be aware of what is happening in your state regarding local fiscal intermediary policies, and keep the AARC informed of any situation that might deem the Association's input.

Below are the 11/17/98 AARC letter to HCFA and the recent HCFA response to our inquiry.

AARC Letter to HCFA

November 17, 1998

Jeffery L. Kang, MD, MPH
Office of Clinical Standards and Quality
Health Care Financing Administration
Baltimore, MD 21244

Dear Dr. Kang:

The American Association for Respiratory Care is extremely concerned over two Fiscal Intermediaries' (FI) sweeping policy edicts regarding the provision of Medicare outpatient pulmonary rehabilitation services. For your information the AARC is a 36,000 member professional association of respiratory therapists.


Blue Cross Blue Shield of Wyoming recently issued a draft policy for the non-coverage of all pulmonary rehabilitation services (see Attachment #1). The policy dictates that all claims for pulmonary rehabilitation services will be denied. This policy clearly deviates from Medicare regulations that provide coverage for outpatient services such as diagnostics, therapeutic services, and patient education, components which comprise pulmonary rehabilitation services (see Attachments #2). Furthermore, the Wyoming draft policy states that regardless of the 45-day comment period, the non-coverage policy for pulmonary rehabilitation services was effective immediately upon release as a draft policy. In essence, this policy makes a sham of the terms "draft policy" and "comment period".

The result of this policy has been the immediate disenfranchisement of Wyoming Medicare beneficiaries to medically necessary, appropriate, and physician prescribed pulmonary rehabilitation services. We request HCFA immediately contact the Wyoming Fiscal Intermediary and demand a retraction of this ill-conceived "draft" policy.


On October 27 1998, John F. Murphy, M. D., Vice President and Medical Director for Blue Cross Blue Shield of Arizona corresponded with a pulmonary rehabilitation medical director (see Attachment #3) regarding claim denials for pulmonary rehabilitation services. As an explanation for the denials, Dr. Murphy indicates that HCFA issued an advisory that "claims for pulmonary rehabilitation were not covered and all processing for payment for such claims should be stopped."

The AARC requests HCFA provide the association with the "advisory" regarding the denial for outpatient pulmonary rehabilitation services. If such an "advisory" does not exist, we request that HCFA immediately notify Blue Cross Blue Shield of Arizona and correct Dr. Murphy's misinformation. As with the Wyoming policy, unless the remedial steps are immediately taken, Medicare beneficiaries in the state of Arizona will no longer have access to pulmonary rehabilitation services.

For over 18 years, the AARC has urged HCFA to develop national coverage policy for the provision of hospital outpatient pulmonary rehabilitation services. As more Fiscal Intermediaries take upon themselves to develop ill-conceived and non-medically justifiable policies for pulmonary rehabilitation services, policies that directly affect the health care of Medicare beneficiaries, it becomes even more imperative that HCFA finally issue a comprehensive coverage policy for pulmonary rehabilitation services.


Dianne N. Kimball, RRT, RCP President

Response from HCFA to AARC Letter

Diane N. Kimball, RRT, RCP
American Association for Respiratory Care
11030 Ables Lane
Dallas, Texas 75229-4593

Dear Ms. Kimball:

Thank you for your recent letter regarding the policies developed by the fiscal intermediaries in Wyoming and Arizona on Medicare coverage of outpatient pulmonary rehabilitation services.

Medicare does not have a national coverage policy on pulmonary rehabilitation services. However, both the intermediary and hospital manuals outline guidelines for coverage of respiratory therapy services, including pulmonary rehabilitation. (I have enclosed the section of the Medicare Intermediary Manual (MIM) that discusses respiratory therapy.) The fiscal intermediaries are responsible for determining when these services meet those guidelines and the reasonable and necessary statutory requirement for coverage.

Blue Cross Blue Shield (BCBS) of Arizona sent out a letter stating that the "claims for pulmonary rehabilitation were not covered" based on an advisory from HCFA. This statement was incorrect and on December 3, 1998, the intermediary retracted the statement. A copy of the letter with the retraction is enclosed. Although there was a retraction, not all pulmonary rehabilitation claims are covered. The service must be medically reasonable and necessary, meet the criteria set forth in section 3101.10 of the intermediary manual, and require skilled supervision. If the pulmonary rehabilitation program consists of little more than unsupervised exercise, it would not be covered by Medicare.

The draft policy developed by BCBS of Wyoming is based on the assumption that pulmonary rehabilitation programs do not require skilled supervision. Because of the lack of a national policy, the intermediary is within its jurisdiction to adopt this non-coverage policy. It is also true that the draft policy could become effective during the comment period if the intermediary believed there was a compelling reason to do so. If BCBS of Wyoming receives convincing evidence that a pulmonary rehabilitation program is more than generalized exercise and requires skilled supervision, it will probably modify its policy to provide limited coverage for the service.

We will consider developing a national coverage policy on outpatient pulmonary rehabilitation services. To do so, we need to review all the relevant scientific literature on the topic. Additionally, we will use data from the national emphysema treatment trial (NETT) once it is concluded. In the interim, the contractor medical directors are working on a model policy for coverage of pulmonary rehabilitation services. It is possible that such a model policy might serve as the basis for a national coverage policy. If the American Association for Respiratory Care has any literature it would like to submit for our review, please send it to Grant Bagley, M.D., Director, Coverage and Analysis Group, Office of Clinical Standards and Quality, Health Care Financing Administration, 7500 Security Boulevard, Baltimore, MD 21244.

Thank you for bringing these intermediary policies to our attention. I hope that I have been responsive to your concerns.


Grant Bagley, M.D.
Coverage and Analysis Group

AARC Comments on Medicare Revisions Affecting
Outpatient Rehab

August 13, 1998
The AARC has again stood up for the respiratory profession in Washington, this time in regards to Medicare revisions that will affect outpatient pulmonary rehabilitation services and "incident to" services. Following is a letter sent last week by AARC Director Sam Giordano to HCFA Administrator Min De Parle seeking clarification of those revisions.

August 7, 1998

ATTN: HCFA - 1006-P
P.O. Box 26688
Baltimore, MD 21207-0488

Dear Administrator Min De Parle:

The American Association for Respiratory Care (AARC) welcomes the opportunity to submit comments regarding the proposed rules on Medicare Program Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 1999. For your background, the AARC is a professional association representing 37,000 respiratory therapists across the country.

The proposed regulations are unclear about how respiratory therapy services will be provided in a number of care sites. Specifically, we seek clarification on coverage and reimbursement for respiratory therapy provided as:

Hospital Outpatient Pulmonary Rehabilitation Services

For over 15 years, the AARC has asked HCFA to develop a national coverage policy for hospital outpatient pulmonary rehabilitation services. The Medicare Intermediary Manual (MIM 3112) clearly covers the components of outpatient pulmonary rehabilitation services: diagnostics, therapeutics, and patient education. However, in lieu of implementing a national policy, HCFA has encouraged the local fiscal intermediaries to develop their own Medicare policies for outpatient pulmonary rehabilitation services.

As a result, these local policies have created an inconsistent patchwork of coverage, fostering confusion for health care providers and beneficiaries. As one example of this inconsistency, in April of this year, Wyoming's fiscal intermediary, Blue Cross and Blue Shield, issued a policy stating that it would no longer cover any hospital outpatient pulmonary rehabilitation services. At nearly the same time, the Florida Blue Cross and Blue Shield intermediary issued an outpatient pulmonary rehabilitation policy that explicitly covers extensive therapeutic, educational, and diagnostic components of a comprehensive pulmonary rehabilitation program. Thus, simply as a result of local intermediary policy, Florida residents have access to pulmonary rehabilitation services and Wyoming residents do not, even though these services are covered by Medicare.

Confusion will increase to an even greater extent when the Prospective Payment System (PPS) for hospital outpatient services is implemented. We understand that these proposed rules for the Medicare Program Revisions to Payment Policies Under the Physicians Fee Schedule do not set forth the payment methodology for the impending PPS for hospital outpatient services, though they do discuss the transition briefly (Sec. C2(b), page 30856). HCFA must clarify how respiratory therapy services in outpatient rehabilitation programs will be covered under PPS.

Comprehensive Outpatient Rehabilitation Facilities (CORF)

Sec. C(1), page 30855 of the proposed rules correctly states that respiratory therapy can be provided to Medicare beneficiaries as a CORF service. Sec. C(2)(b)(4), page 30857 states:

... "that all services furnished by a CORF, and not just outpatient rehabilitation services, will be paid the applicable fee schedule amount. In cases where there is no physician fee schedule amount for the services, Sec. 1834(k) specifies that the applicable fee schedule amount will be the amount established for comparable services as specified by the Secretary."

Respiratory therapy services are not included in the:

  1. Physician fee schedule
  2. Prosthetic and Orthodic Devices fee schedule
  3. Drug and Biological fee schedule
  4. Durable Medical Equipment fee schedule

The proposed regulation creates a new HCPC code for nursing services, G0128. Respiratory therapy is not a subset of nursing services, therefore respiratory care would not fall under the newly created G0128 code. Respiratory therapy services, however, are subject to salary equivalency guidelines. We request clarification as to whether respiratory therapy salary equivalency guidelines will be used in lieu of a fee schedule when respiratory services are rendered in a CORF, or whether a specific fee schedule will be developed for respiratory therapy services.

Respiratory Therapy Provided as "Incident to" a Nonphysician Practitioner Service

Sec. D, page 30861 of the proposed rule states:

"With respect to services and supplies furnished as incident to a nonphysician practitioner service, we are proposing that to be covered by Medicare, the services must meet the long-standing requirements in Sec. 2050 of the Medicare Carriers Manual applicable to services furnished as incident to the professional services of a physician."

The services of a respiratory therapist can be covered by Medicare under "incident to" a physician service. As long as nonphysician practitioners meet the criteria of Sec. 2050 of the Medicare Carriers Manual, we conclude that the services of a respiratory therapist in the employ or under contract to a nonphysician practitioner may also be reimbursed to that nonphysician practitioner. Please address whether this interpretation is correct.

If the AARC can provide any further information, please do not hesitate to contact me.


Sam P. Giordano, MBA, RRT
Executive Director

PPS to be Developed for Hospital Outpatient Services

August 1998
The provision of the Balanced Budget Act of 1997 which calls for the development and implementation of a Prospective Payment System for hospital outpatient services has been postponed until after the year 2000. This new payment system will include outpatient pulmonary rehabilitation services. The original January 1, 1999 start date has been postponed because of HCFA's problems in becoming Year 2000 compliant.